RE investors paying half of AIFMD costs

Nearly half of the additional costs of complying with the AIFMD will be passed onto investors by real estate managers, according to a recent survey.

Real estate investors have been left footing almost half (44 percent) of the Alternative Investment Fund Managers Directive (AIFMD) bill, according to a recent survey from real estate trade body INREV.

The survey revealed that real estate fund managers, who are sharing the cost of the directive, will absorb 56 percent of costs related to AIFMD while the remaining 44 percent is passed on to investors.

However, 35 percent of fund managers expected to pay for all of their AIFMD compliance, while approximately 42 percent said they would share the costs with investors. 23 percent of fund managers will pass on all costs to investors.

The report describes the cost of AIFMD compliance as “significant” but that it has not hampered the launching of funds and almost 95 percent of respondents said they did not seriously consider re-domiciling their funds outside the EU.

In fact a similar survey from software provider Multifonds, conducted back in June, said the directive will cost much less than previously expected.

The survey, of fund managers and fund administrators in Europe, found respondents think the main cost – employing a depositary – will be about 2.5 basis points of assets under management (AUM), rather than last year’s prediction of 5-25 basis points.

BNY Mellon also quizzed fund managers on the cost of the AIFMD earlier this year with nearly half (48 percent) of GPs expecting the total cost of compliance to be less than $200,000. When taking into consideration all GP responses the mean expected total cost of AIFMD implementation is $300,000, the BNY report said.